Month: February 2015

A longstanding standard in the drafting of contracts, the so called “non-variation clause”, came under scrutiny in light of the provisions of the Electronic Communications and Transactions Act 25 of 2002 (hereinafter “the Act”). The gist of the dispute at hand was whether the agreed terms of non-variation, in particular requiring the signatures of both parties, were achieved via electronic correspondence.

Wilberry (Pty) Ltd (hereinafter “Wilberry”) concluded several agreements with Spring Forest Trading 599 CC (hereinafter “Spring Forest”), including four rental agreements for the lease of Mobile Dispensing Units (MDUs) at four locations. All agreements between the parties shared the same non-variation clause. Spring Forest failed to meet the agreed rental commitments and, as a result of which, the parties held a meeting from which four proposals crystallized. Spring Forest undertook to consider these and revert. The following day, by way of five electronically mailed messages between the parties, the proposals were confirmed and Spring Forest indicated its election to “cancel the agreement and walk away”, per proposal 2. The names of the parties, acting on behalf of their respective enterprises, appeared at the foot of each electronic mail message.

Spring Forest thereafter contracted with another entity to conduct the same business. Wilberry instituted proceedings in the Durban High Court, interdicting Spring Forest from continuing its business, citing (with regard to the cancellation) non-compliance with the non-variation clause and, thus, that Spring Forest was acting in breach of the agreements between the parties. The interdict was granted and Spring Forest appealed to the Supreme Court of Appeal, arguing valid cancellation of the agreements.

When the formal requirements of writing and signature are imposed by statute or the parties to an agreement, these requirements may be satisfied through electronic means. The Act records that, with specific reference to the formation and validity of agreements, “an agreement is not without legal force and effect merely because it was concluded partly or in whole by means of data messages”.

The agreed requirement of writing, subject to exceptions, is satisfied if writing takes the form of a data message. In the case under consideration, there was no dispute that this requirement was met.

In so far as signatures are concerned, the Act distinguishes between an “advanced electronic signature” and an “electronic signature”. In short, when a signature is required by law, and the type of signature is not specified, the advanced electronic signature is applied, and when a signature is required by the parties to an electronic transaction, and the type of signature is not specified, the electronic signature is applied subject to stipulated conditions. In the case under discussion, it was held that the non-variation clause’s signature requirement is met through use of the electronic signature.

The remaining enquiry is whether the names of the parties at the foot of their respective correspondence constitute electronic signatures. The Act describes an electronic signature as “data attached to, or incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”, thus, as long as data is intended to serve as a signature, and is logically connected with other data, the signature requirement is met.

The Supreme Court of Appeal ultimately found that, in light of the Electronic Communications and Transactions Act, the correspondence via electronic mail was in accordance with the terms of the non-variation clause and, as such, confirmed the validity of the cancellation of the agreements between the parties.

It must be borne in mind that this dispute pivoted on interpretation of the law and its application to the merits. The merits were not in dispute; the parties did not dispute the content of the electronic messages, nor the identity of the respective authors. Judgment in this matter, through interpretation of the law, has not created law that did not already exist but highlights the ease with which a contract, that may previously have been considered ‘bulletproof’, could easily be amended by a lay person through, what is now, an everyday activity. In addition, consider the host of electronic communication mediums (sms, Skype, WhatsApp, Facebook Messenger, Twitter’s direct messages are but a few) that, in the correct circumstances, may well provide the platform for valid amendment of various agreements.

It’s the year 2015 and the majority of our world today live digitally through online social media platforms, gaming environments, websites, chat rooms, shopping sites and more. The growth of our digital world however gives rise to new legal questions relating to your digital ‘assets’. Digital assets include all your online accounts and hard storage devices that contain data which can be both personal and financial. Online accounts include social networking, email, cloud storage, financial accounts, digital music libraries, e-book collections, domain names, online photo galleries and so much more, stored on an array of digital platforms.

What will happen to these digital assets upon your death? The reality is that these digital assets also need administering and what happens to it after you’ve passed away may in fact, be up to you, and may be something that can be provided for when preparing your will.

The definition and purpose of a will must be considered in the determination of providing for virtual assets, a will is a document that, amongst other things, provides for the orderly distribution of your property after your death and appoints an executor to carry out this distribution, this is essential in order to simplify matters following your death and to ensure that your property passes to those whom you wish to benefit.

When most people have their wills prepared, they often only consider their tangible property, but little, if any, consideration is given to their intangible assets, such as intellectual property or digital assets. For example, you may want to consider granting someone access to your Facebook account after you pass away in order to close out your Facebook account or carry out other specific instructions.

Property, in this context, includes all of a person’s assets, including digital assets. The digital assets that one might transfer in their will might include email accounts, digital music, digital photographs, digital videos, social networking accounts, file sharing accounts, and any other type of digital assets on an array of digital platforms.

South African legislators have yet to attempt to classify what would comprise digital assets and as a result, digital inheritance remains largely undeveloped, this does however not mean that digital assets should be overlooked in the administration of wills and estates. In the USA, five states already have draft legislation in place to introduce the regulation of digital assets and the rest of the world will soon have to catch on, South Africa included.

Digital assets are becoming a material part of who we are and what our asset base is, and therefore a few aspects of estate planning and estate administration should be considered to ensure the validity of the entire process and to protect the sensitive nature of provided information.

There are several issues that are relevant to the disposition of digital assets, including but are not limited to:

ownership; and

access and control.

Ownership of digital assets

An important issue related to digital assets is the ownership of digital assets. For example, if one purchases a digital copy of a movie, does that grant the purchaser actual ownership over a copy of the media, similar to analog media purchases, or alternatively, mere permission to watch / read / listen to the media whenever the purchaser wants? We’ll have to leave this question for the courts to decide.

Also important in answering the ownership question is the Use Agreement entered into between the deceased and the service provider. Depending on the content of the Use Agreement, it might very well be the case that the deceased does not have ownership rights over these assets. If this is the case, the deceased would not have the right to transfer ownership of the digital assets. The Terms of Service for many internet account service providers, such as Facebook, claim that the service provider own the rights to virtually everything its users post on the service providers website.
Ownership of digital assets is therefore only practical where those who are to have ownership and control also have the ability to access these digital assets.

Access to and control of digital assets

In addition to dealing with the transfer of digital assets, when preparing a will, you should consider the issue of access to digital assets and the right to manipulate such assets
Digital assets are an important part of your estate and need to be considered carefully when having your will prepared or when considering your estate planning. Otherwise, not only will you stand to lose financial digital assets, but also digital assets that carry sentimental value. During the estate planning process clients take account of their tangible assets and turn their minds to which they would like their tangible assets to be passed, the same attention and consideration ought to be paid to intangible assets.

Estate planning must keep pace and evolve into the digital age. These days, estate planning involves much more than simply deciding who gets our house and our cats. It’s a fact that most of us have a significant online presence and that this presence is growing.

In terms of legislation each person is entitled to freedom of testation and although legislation does not expressly address how and when to provide for your digital assets in your will, it’s prudent to reflect on, and provide specific instructions in respect of, these issues during the estate planning process.

Surrogacy can be defined as an arrangement in which a woman carries and delivers a child for another couple of person. For many couples or persons who cannot conceive or deliver a child of their own, surrogacy is their last resort to have offspring genetically linked to them.

Until the enactment of the Children’s Act 38 of 2006, surrogacy was not recognised in South Africa, although there have been reported instances of informal surrogacy. Now, Section 292 of the Children’s Act provides for a formal written SMA to be entered into between the commissioning parents and the surrogate mother.

However, due to the fact that a child is subjected to the SMA, although not a party to the agreement, the High Court, as upper guardian of all children, acting in the best interest of the child, must confirm any SMA, as provided for in Section 295 of the Children’s Act, to render such agreements valid and before any artificial fertilisation of the surrogate mother may commence. Children’s rights to parental care are, amongst other, nationally protected by The Constitution of South Africa 108 of 1996 and internationally by the African Charter on Human and Peoples’ Rights, The Universal Declaration of Human Rights and The International Covenant on Civil and Political Rights. Accordingly the court will only confirm any SMA once it has satisfied itself that the commissioning parents are suitable and able to adequately provide for the child in future, both socio-economically and emotionally.

Upon considering unique and complex issues such as the risk of commercial surrogacy, best interests of the child and determining the suitability of commissioning parents, the North Gauteng High Court in Ex Parte Matter between WH, UVS, LG and BJS found that the following averments, with available supportive documentary proof, should be made in the affidavit supporting an application for confirmation of a SMA:

That the parties to the agreement have fully complied with the requirements of a SMA as set out in Sections 292, 293, 294, 295 and 301of the Children’s Act, including, but not limited to:

that the SMA is in writing and signed by all involved parties of which at least one of the commissioning parents, and the surrogate mother is domiciled within the RSA;

that the spouse or permanent partner of the commissioning parent or surrogate mother has given their written consent to the SMA and is now also a party to the SMA;

that the gametes of both, or one of the commissioning parents, or where the commissioning parent is a single person, the gamete from that person, is being used during the conception of the contemplated child, thereby establishing a genetic link with the commissioning parent(s);

that the commissioning parent(s) are not able to give birth to a child due to a permanent and irreversible condition;

that all the parties to the SMA are competent to enter into the agreement;

that the commissioning parent(s) are suitable persons to accept parenthood of the child that is to be conceived and that the surrogate mother is in all respects a suitable person to act as surrogate mother;

that all the parties to the SMA understands and accepts the legal consequences of the agreement, including their rights and responsibilities in respect thereof;

that the surrogacy mother is not using surrogacy as a source of income, but has entered into the SMA for altruistic reasons and not commercial purposes, but that the surrogacy mother may be compensated for:

expenses that relate directly to the artificial fertilisation and pregnancy, the birth of the child and the confirmation of the SMA;

loss of earnings suffered by the surrogate mother resulting from the SMA;

insurance to cover the surrogate mother for anything that might lead to her death or disability resulting from the pregnancy.

that the surrogacy mother has a documented history of at least one pregnancy and viable delivery and has a living child of her own.

Full particulars of how the commissioning parents came to know the surrogate mother and why she is willing to act as surrogate to them, including the surrogate mother’s background and financial position;

A comprehensive report by a psychologist assessing the suitability of the surrogate mother and the effect that the surrogacy and giving up the baby will have on her;

A medical report and full medical reports on the surrogacy mother dealing with her physical condition, HIV status and any disease that could be transferred from her to the child;

Details of the gamete donor, if not coming from both the commissioning parents, without revealing the identity of the gamete donor;

Full particulars of previous applications for surrogacy as well as the outcome and reasons of such applications;

A comprehensive report by a psychologist in respect of the commissioning parents;

All agreements between the surrogate mother and any intermediaries or other person involved in the process, including any details and proof of payments of any compensation for services rendered, either to the surrogate mother or the intermediary, gamete donor, clinic or any third party involved in the process;

Full particulars of any agency involved and any payment received by them, including the exact business and involvement of the agency regarding the introduction of the surrogate mother, how the surrogate mother’s information was obtained by the agency and whether the surrogate mother received any compensation from the agency or commissioning parents;

Whether any of the commissioning parents have been charged with or convicted with a violent crime or a crime of a sexual nature.

Any vague or generic allegations regarding these averments that fall short of supporting a conclusion may well render an application defective.

It is thus advisable to consult an attorney prior to applying for confirmation of Surrogacy Motherhood Agreements.

Many people take it upon themselves to draft their own will and although there is nothing wrong with it, the risk exist that they then fail to comply with the formalities prescribed by the Wills Act 7 of 1953, which could in return render the will invalid and result in the estate being administered in terms of the Intestate Succession Act 81 of 1987.

So what exactly is a will? A will is a written document in which a person, who is older than 16 years and mentally capable, voluntarily sets out his instructions as to how his estate should devolve upon his death. Taking this into consideration it is clear that a will must be in writing and must be made freely.

The above is however not the only requirements. In fact, the Wills Act prescribes a number of formalities with which a will must comply in order to be valid and these formalities are as follows:

the will is to be signed at the end thereof (directly beneath the attestation clause), by the testator or by some other person in his presence and by his directions;

the will is to be signed in the presence of two or more competent witnesses who are older than 14 years and have no interest in the will, i.e. are not heirs in terms of the will;

the witnesses are to attest and sign the will in the presence of the testator and of each other. (The witnesses do not have to know the content of the will, but merely have to acknowledge that they have seen the testator sign the will);

if the will consists of more than one page, each page other than the last page must also be signed by the testator or by such other person as referred to in paragraph 1 above, anywhere on the page;

if the will is signed by the testator by making a mark or by some other person in the presence and by the direction of the testator a commissioner of oaths must certify that he has satisfied himself as to the identity of the testator and that the will so signed is the will of the testator.

Furthermore the testator should also nominate an executor (i.e. person who will be responsible for the administration of the estate), appoint heirs and legal guardians for minor children, in the will.

The formalities and guidelines set out above are only a few aspects that have to be taken into account when drafting a will. We therefore recommend that one rather obtains professional estate planning advice when considering drafting a will.

On the 15th of January 2015 the Labour Relations Amendment Act came into operation, which gave rise to the infamous Section 198B.

Dreadful in the eyes of employers and welcomed by employees, Section 198B is here to stay as it in essence gives effect to the legislator’s intentions. Fixed term contracts have formed part of the Labour Relations Act (LRA) since its enactment in 1995 and therefore are not a new concept in the South African labour law. What is new is the application thereof.

Prior to the Amendment Act, failure to renew an employee’s fixed term contract could have constituted dismissal and in such instances provided some security to the employee. The effects of Section 198B is that the onus as well as the burden of proof have shifted to the employer, as the employer may only employ an employee on a fixed term contract or successive fixed term contract for longer than three months if: the nature of the of the work for which the employee is being employed is of a limited or definite nature or the employer can demonstrate any other justifiable reason for fixing the term of the contract. Therefore an employer will be required to prove that there was a justifiable reason for fixing the term of the contract.

The effect of the above is that, should an employer employ an employee or renew an employee’s employment in terms of a fixed term contract without a justifiable reason such an employee will be deemed to have been employed for an indefinite duration. Section 198B(6)(a) and (b) supports this notion in that employment on such terms must be in writing and state the reasons for the fixing of the term of the contract as contemplated in subsection (3) as mentioned above.

Unfortunately or fortunately, depending on which side you are on, the legislator has limited the application of Section 198B to employees earning less than R205 433.30 per annum, employees employed by an employer with less than 10 employees or has less than 50 employees and has been in operation for less than two years or has been formed by the division or dissolution for any reason from an existing business. In the instances where an employee has been excluded, and employed in terms of a fixed term contract, the status quo remains, meaning an employer’s failure to renew or willingness to renew a fixed term contract on less favourable terms could constitute dismissal should the employee be under reasonable expectations that the fixed term contract would have been renewed.

As if the Amendment Act has not placed enough stress on employers already, employers are expected to conclude such fixed term contracts with current fixed term employees within three months from the 15th of January 2015, as it is contemplated in Section 198B (8) (b) that the application of subsection (a) has been postponed for three months after the date of commencement. Failure could result in labour disputes relating to possible dismissal of an employee employed for an indefinite purpose, which we all know as a permanent employee.

With all this having been said it is the duty of the Government to protect the vulnerable persons in society and through this Amendment Act the legislator appears to be alive to that responsibility in light of the fragile labour market in our country.